NUKE deal, India's credit rating.....

United State's reminder to India to speed up the civilian Nuclear deal is a very serious warning having tremendous implications.

It may be noted that India's credit rating was upgraded to Investment grade only after Nuclear deal in principle. This caused exodus of US Pension Funds and other similar funds who are authorized to invest only in investment grade country.

If Nuke deal does not become a reality, there is serious risk to India for losing its investment grade status. If that happens, there will be mass exodus of Hedge and Pension funds from India. This will also push down Indian rupees to Rs 48 or further down, increasing the Oil Import bill by another 10%.

Indian growth story will be severely dented. It is important for all political parties to reconcile their differences and at least approve the deal so that catastrophe does not happen.

This will be the most important event. Watch for the early approval of the deal or rush to the exit gate to sell the stock at whatever the price. Recovery of stock market will be highly impossible, except for high tech stocks.

As hedge, stay with the high tech and BPO stocks. who will be least affected. Their fall from grace during such market meltdown will be the best buying opportunity.

Kalidas, Hong Kong
23-08-2008 (Ref: 09-061)

14)

for brb-1
Impossible scenario. You do not know the leftist. This party should be banned altogether as they are found to be undemocratic and totally destructive. They simply do not know what they want.

If BJP has any decency, and places the national interest ahead of politics (as they constantly beat the drum), then leftist will have no effect at all. Congress should unite with BJP and ditch the leftist to continue with the political stability and maintain the hard earned economic progress.

But the ranks in BJP like Advani are extremists. They like 'padyatra' more than the national interest. I used to be BJP supporter for long, but now consider them as totally useless and unprincipled organization. I would never vote them back to power.

I reiterate that if NUKE deal is not signed, forget the SENSEX - it can go down to any level. FII will simply get out en masse and India's FOREX reserve will go out of the country with big bang. Most of NRI may also withdraw from stock market, bank deposits and real estate due to powerful adverse effect on rupee. They burnt the finger once, and they will be hard pressed not to return to India again.

To me NUKE deal is extremely important matter, and I give priority even on inflation.

Kalidas, Hong Kong
24-06-2008

15)

for Blue Violet,

Thanks for taking pain to produce the message containing the views of the 3 prominent Atomic Scientists against the deal. Yes, I do respect Arun Shourie, former editor of Indian Express.

There are two issues. Science and Commerce follow parallel lines, but never meet like a railway track. Producing electricity via coal at cheaper cost is a good idea, but with coal prices rising at fastest pace, and India being a net importer of coal, the recurring cost is going to be very high, which may increase the cost of electricity.

Nuclear energy is one of the most efficient one where capital cost is high but recurring cost is low. Look at Japan and France (who has maximum nuclear reactors) who are able to supply electricity at much lower cost to their own industries. The very fact that Japanese goods are produced with best quality at cheaper cost underscores the fact that even high cost oriented Japan finds cost of nuclear energy acceptable proposition. Have you ever heard Japan complaining against Oil price rise affecting Japanese industries like steel or chemicals? It is due to availability of cheaper and continuous supply of electricity from its nuclear reactors.

Coal may be a good source, but it is highly pollutive and anti-health input. What use of electricity if it powers your home but fills up your lungs with smokes and toxic gases? Even coal fired locomotives are discontinued because they are pollutive.

You are 100% right in that we should have better bargaining strength in negotiating with US in finalizing the deal.However, please note that the agreement is only 'preliminary' and on 'principle'. Same principles are applied in case of Japan or France or Canada or even Britain who are all democratic and prosperous countries.

Last month I was in India at Amravati (in Vidarbha, near Nagpur) where MIDC (Maharashtra Industrial Development Corporation) has developed 5 star industrial estate admeasuring 5500 hectare or 11000 acres. It is just vacant. Even in old MIDC in the middle of the city, nearly 70% of units are closed.

Main reason is lack of adequate power. I saw city of 2.5 millions going without power for almost 6 to 8 hours a day. There can not be any hydro-electric, coal or oil powered stations, since the place is far away from raw input centers. Only Nuclear reactor can rejuvenate to make it vibrant industrial city creating thousands of employment.

Due to lack of job opportunities, and despite 26 universities around, the average wage earner makes about Rs 3000 to Rs 4000 per month which may be 50% to 75% below similar level in big cities like Mumbai.

When you are in growth stage with almost 1 billion people to take care of, you must be prepared to make compromises. Try to make Nuclear power stations without the approval of major powers like USA, and you will be outcast, not only that, a time will come when those powers may seek to destroy your facilities on military ground. Look at Iran which is a shining example. Saddam tried for Iraq and see the beautiful country of Iraq in a rubble state.

I agree with your other viewpoints. There has to be a very healthy debate, similar to one in Northern Ireland, who refused to honor Lisbon treaty and opted out of European Nation.

You have two choices - Growth or Poverty. Mere signing up of a nuclear deal does not deprive the nation of its sovereignty or its freedom. You are entering into agreement with a democratic country, where everything is done under open sky. You know more about America and its systems, politics, likes, dislikes etc only because their media is open and widely broadcast in India in English.

What the Government should do is to include some of those Atomic Scientists in its negotiating team so that interests of all are preserved. This is the right approach - not out of hand rejection on the basis of nationalism or false sense of insecurity.

Kalidas, Hong Kong
25-08-2008

16)

for rtoshniwal1,

Honestly, I do not know much about the stock you mentioned. In fact, I do not know much about IT stocks, because they are difficult to follow. They are more internal news driven and there is little to verify their information by public record.

I never bought any IT stocks nor I intend to except very large ones, such as Infosys & Wipro in severe correction.

Kalidas, Hong Kong
26-03-2008